Monthly Archives: February 2016

WHO WILL REPLACE SIMON JACK ON BBC TODAY PROGRAMME – UPDATE

UPDATE – The bush telegraph has been working overtime and apparently my antennae is not up to scratch.  Firstly my apologies to Adam Parsons, who I thought was 5-live through and through. I am told he has a good following and is well fancied.  Also Louise Cooper is an outsider with work to do on her current handicap mark and though very talented, this is a step up in class as they say in horse racing parlance.

 

 

—————————————————————–

I was watching a very average Capital One Cup Final; so my mind started to wander. Consequently I have decided to be playful and price up a market on Simon Jack’s successor as Today’s business presenter as if I were acting as a bookmaker. I was one, once upon a time. However I do not want any emails or messages informing me that I’ve got my ‘over and arounds’ wrong! 

 

With Simon Jack about to step in to the polished Kamal Ahmed’s boots as Business editor, I wondered who might be under consideration by James Harding and James Purnell as a likely successor as business presenter on BBC Today and copious other business radio programmes – A prestigious appointment in terms of professional prestige and kudos.

 

You might be forgiven for thinking that there are several in house candidates – all excellent – very polished, knowledgeable and qualified for that position – Joe Lynam, Tanya Beckett, Jonty Bloom and Matt Price immediately come to mind. And if you are looking for 2 for the future Victoria Fritz and Ben Thompson would tick all the boxes.

 

However the BBC never tend to make matters easy for themselves. In recent years they have made senior appointments from outside the corporation if Messrs Peston, Ahmed and Kuenssberg are anything to go by and one gets the impression that James Harding, Head of News at the BBC is always looking outside for candidates.

 

So here are ‘my runners and riders’ based on my diseased ridden mind working overtime.

 

JOE LYNAM – 7/2 – 4/1

 

TANYA BECKETT – 7/2 – 4/1

 

ADAM PARSONS – 4/1

 

JONTY BLOOM – 11/2

 

SIMON ENGLISH (TIMES) – 6/1

 

MATT PRICE – 7/1

 

HUGO DUNCAN (DAILY MAIL) – 8/1

 

VICTORIA FRITZ – 8/1

 

LOUISE COOPER – 12/1

 

JAMES MOORE (INDEPENDENT) – 12/1 – 20/1

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WHO WILL FIT INTO SIMON JACK’S BOOTS ON BBC TODAY PROGRAMME WITH COMFORT?

WHO WILL FIT INTO SIMON JACK’S BOOTS ON BBC TODAY PROGRAMME WITH COMFORT?

 

I was watching a very average start to The Capital One Cup Final yesterday; so my mind started to wander. Consequently I decided to be playful and price up a market on Simon Jack’s successor as Today’s business presenter, as if I were acting as a bookmaker. I was one, once upon a time. However I do not want any emails or messages informing me that I’ve got my ‘over and arounds’ wrong! These pricing are only guesstimates.

 

With Simon Jack about to step in to the polished Kamal Ahmed’s boots as Business Editor, an accolade Simon richly deserves, I wondered who might be under consideration by James Harding and James Purnell as a likely successor as business presenter on BBC Today Programme and copious other business radio programmes – A very prestigious appointment in terms of professional prestige and kudos.

 

You might be forgiven for thinking that there are several ‘in-house’ candidates – all excellent – very polished, knowledgeable and qualified for that position – Joe Lynam, Tanya Beckett, Jonty Bloom and Matt Price immediately come to mind. And if you are looking for 2 for the future Victoria Fritz and Ben Thompson would tick all the boxes.

 

However the BBC never tends to make matters easy for itself. In recent years they have made senior appointments from outside the corporation if Messrs Peston, Ahmed and Kuenssberg are anything to go by and one gets the impression that James Harding, Head of News at the BBC is always looking for outside candidates.

 

So here are ‘my runners and riders’ based on my diseased ridden mind working overtime.

 

JOE LYNAM – 7/2

 

TANYA BECKETT – 7/2

 

JONTY BLOOM – 11/2

 

SIMON ENGLISH (TIMES) – 6/1

 

MATT PRICE – 7/1

 

HUGO DUNCAN (DAILY MAIL) – 8/1

 

VICTORIA FRITZ – 8/1

 

JAMES MOORE (INDEPENDENT) – 12/1

TODAY’S FAYRE

TODAY’S FAYRE – Sunday, 28th February 2016

 

“Once a dream did weave a shade
O’er my angel-guarded bed,
That an emmet lost its way
Where on grass methought I lay.

Troubled, wildered, and forlorn,
Dark, benighted, travel-worn,
Over many a tangle spray,
All heart-broke, I heard her say:

‘Oh my children! do they cry,
Do they hear their father sigh?
Now they look abroad to see,
Now return and weep for me.’

Pitying, I dropped a tear:
But I saw a glow-worm near,
Who replied, ‘What wailing wight
Calls the watchman of the night? 

 

‘I am set to light the ground,
While the beetle goes his round:
Follow now the beetle’s hum;
Little wanderer, hie thee home!” 

 

 William Blake – painter & poet – 1840 – 1928

 

Ever since I saw the 1955 film of ‘Guys & Dolls’ based on Damon Runyan’s book, starring Marlon Brando, Frank Sinatra, Jean Simmons and Stubby Kaye, I have always attempted to take in every stage production of it in London. I particularly enjoyed the National Theatre’s effort starring Ian Charleson, Julia McKenzie and Bob Hoskins in 1982. Even though the current Chichester Festival Theatre’s production at the Savoy Theatre does not have such as star-studded cast, Sophie Thompson, David Haig and Jamie Parker make a real fist of producing brilliant entertainment with a vibrant, enthusiastic, amusing and dramatic spectacle – a huge evening thoroughly enjoyed by all!

 

Though the vagaries of the oil market proved to be the matinee idol for global equities’ theatre of dreams last week, banking results from HSBC, Standard Chartered, Lloyds Banking Group and RBS plus the plight of the London Stock Exchange made valiant attempts to grab the headlines in London last week. The level of volatility was seismic in the last 5 days with the net result for each bourse’s performance having little bearing to reality. Huge companies gained and lost massive percentages throughout the week – almost unprecedented even during the times of the 2008/9 financial crisis and the Iraq war going back to 2003. It is understandable that mining companies from such a trashed level should post double-digit changes in the hope that post the ‘kitchen-sinking’ of their results, there was some possibility of recovery in the air. However when it happens to large banks and it did in terms of Standard Chartered, no one can be surprised that the odd eyebrow was ‘cocked’ in surprise and concern in the process. 

 

To summarise, the S&P last week added 1.9% in value with the FTSE grabbing a very meaningful 2.45%, with European bourses adding an average of 2.5%, with Japan settling for 1.39% gain, despite concern over Abenomics and a strong Yen, which was unhelpful. The Shanghai Composite had a shocker, losing 6.5% on Wednesday, but closing only 3.4% down on the week.  As previously stated oil was demonstrably volatile and over influential on equity prices. Brent crude eventually finished the week up 8.8%. The Dollar was always in the driving seat and gold, having touched $1260 an ounce finished the week down to $1221 an ounce on Friday night.

 

IMHO, despite tough warnings of the potential danger to the UK’S economy in the event of BREXIT flagged up by George Osborne at the G-20 meeting in Shanghai, the fall in Sterling’s value in the past 2 weeks attributed to BREXIT is greatly over-stated – in fact much of it is twaddle. The Dollar is strong period. It is the only mature economy that threatens to increase interest rates in 2016. Inflation is almost consequential at 1.7% in the US, though Friday’s reading of US GDP grew at an annualised rate of 1% in the fourth quarter. In the case of the U.K. GDP grew at an annualised rate of 1.9%, a fair bit lower than the original estimate of 2.3%. 

 

Just to put a little more meat on the bone on the four main UK banks that reported annual results, both their results and investors/the public’s feelings towards them understandably attracted very mixed emotions.  All four banks and Barclays had roller coaster rides in terms of the performance of their share prices. By Wednesday, apart from Lloyds and HSBC, the rest were down at one point by almost double digit percentages. So for the sector, with the exception of RBS, to end last week’s 5 day trading period in positive territory was miraculous. I hasten to add that the sector’s performance in the last 3 months has been pitiful at best. 

 

5-day performance from 22nd February to 26th February – RBS -8.4%, HSBC +5.9%, Lloyds +15%, Standard Chartered +1.2%, Barclays +4.1%.

 

Cost cutting and PPI provisions and impairment charges were high on many of the agendas. HSBC’s chairman Douglas Flint will be standing down this year and CEO Stuart Gulliver next year. The woes of Bill Winters, CEO of Standard Chartered Bank, seem to get worse. So with excessive exposure to emerging markets, cutting back the balance sheet and making 15k redundancies seems a sensible though very painful remedy. Lloyds Banking Group’s shareholders were bought off by two generous dividends in the circumstances, much to the chagrin of the taxpayer who still owns 9% of the bank. PPI claims for the year were £4 billion and still the senior management backed the truck up for massively increased emolument! In fairness I suppose the share price has recovered, but the PPI claims for the last few years are disgraceful – I think £15 billion! Barclays Bank posts numbers next Tuesday and Chairman John Macfarlane and new CEO Jas Staley will be under the cosh to unveil the banks plans going forward and the roll New York will or will not play in investments banking. Investors also want updating on the ugly litigious spat between the banks and Amanda Staveley and the manner that capital was raised for the bank in Abu Dhabi and Qatar in 2008. 

 

On the question of emoluments, thus was also the case also for RBS’S Ross McEwan, whose package doubled in size to an alleged £3.8 million, despite RBS incurring losses for 8 consecutive years. Last year’s efforts included a £2 billion provision for US mortgage misdemeanours and PPI claims. Though Lloyds Banking Group is within a couple of pence from break even, RBS remains well and truly under water. Shares closed on Friday at 227p with break even at 502p! It seems very unlikely that the taxpayer will ever be fully recompensed in terms of the £45 billion bail-out. The banking sector will only be for brave investors for the next few months. I have no idea if it is just circumstantial, but I notice Lord Mervyn King is having his book serialised in the Telegraph, warning that the World awaits another crash, as in his opinion, regulators and banks have failed to grasp the nettle over necessary reform. Interesting thoughts, but I sincerely hope that Lord King does not pop up on the world stage with monotonous regularity like Greenspan, pontificating on the world’s economy and how he would put it right! 

 

Finally, suffice to say that I am devastated that the LSE’s overall control may fall in to German hands in a £20 billion merger with Deutsche Boerse. I am a progressive and I do understand free markets and greater penetration. Like thousands of others we must remember that that there is no such deal as a joint venture. Once we allow control to leave London, the LSE is on a slippery slope and the party is over. London is the financial centre of the universe. However effective the Deutsche Boerse is as an exchange, Frankfurt is a Mickey Mouse financial centre by comparison – BREXIT or no BREXIT. Good sense must be allowed to prevail. I can see Messrs Cameron & Osborne smiling like Cheshire cats, due to their pro-EU stance, but this deal is not for passionate UK nationalists or City of London operators. Xavier Rolet has done an outstanding job as LSE CEO. Everyone knows he has political aspirations to stand in the next French presidential elections, but there is no need for him to hand control to Frankfurt with such indecent haste. There are plenty of candidates to run this very successful service to the world of global investors. I am sure that chairman elect Donald Brydon and Carsten Kengeter, CEO elect and former head of UBS investment bank are pillars of financial society, but nothing will persuade me that the proposed deal is anything but the beginning of the end for the heritage and influence of the LSE – a tragedy! 

 

 

 

 

UK companies posting results this week – Monday – Keller Group, Photo-Me, Bunzl, Hiscox, Jupiter Fund Management, Tuesday – Barclays, Direct Line, Just Eat, Taylor Wimpey, Tullett Prebon, Greggs, Fresnillo, Moneysupermarket, Glencore, Ashtead – Wednesday – ITV, Dignity, Intertek, Stagecoach, Thursday – Whitbread, CRH, Admiral, Inmarsat, Denel Energy, Shawbrook, Travis Perkins, Friday – LSE, WPP

 

US companies posting interim results – Saturday – Berkshire Hathaway, Monday – Taser, Tuesday – Autozone, Dollar Tree, Ford Motor (sales) Wednesday – Brown Forman, Abercrombie & Fitch, Thursday – Rite Aid, Stage Stores, Ciena, Barnes & Noble, Kroger, Smith & Wesson, H&R Block, Friday – Big Lots.

ECONOMIC DATA – Monday – UK money supply and mortgage approvals, US Chicago PMI, Tuesday – UK PMI, Wednesday – US PPI and Oil inventories, UK PMI construction, Thursday – UK PMI services, US Initial Jobless Claims, Friday – UK CPI inflation estimates , US Non-Farm Payrolls & employment data. 

 

David Buik

Market Commentator – Panmure Gordon & Co


D +44 (0)20 7886 2775

Mobile – 0044 7788 144 877


Panmure Gordon & Co


One New Change | London | EC4M 9AF | United Kingdom

TODAY’S FAYRE – Sunday, 28th February 2016 

“Once a dream did weave a shade
O’er my angel-guarded bed,
That an emmet lost its way
Where on grass methought I lay.

Troubled, wildered, and forlorn,
Dark, benighted, travel-worn,
Over many a tangle spray,
All heart-broke, I heard her say:

‘Oh my children! do they cry,
Do they hear their father sigh?
Now they look abroad to see,
Now return and weep for me.’

Pitying, I dropped a tear:
But I saw a glow-worm near,
Who replied, ‘What wailing wight
Calls the watchman of the night? 

 

‘I am set to light the ground,
While the beetle goes his round:
Follow now the beetle’s hum;
Little wanderer, hie thee home!” 

 William Blake – painter & poet – 1840 – 1928

Ever since I saw the 1955 film of ‘Guys & Dolls’ based on Damon Runyan’s book, starring Marlon Brando, Frank Sinatra, Jean Simmons and Stubby Kaye, I have always attempted to take in every stage production of it in London. I particularly enjoyed the National Theatre’s effort starring Ian Charleson, Julia McKenzie and Bob Hoskins in 1982. Even though the current Chichester Festival Theatre’s production at the Savoy Theatre does not have such as star-studded cast, Sophie Thompson, David Haig and Jamie Parker make a real fist of producing brilliant entertainment with a vibrant, enthusiastic, amusing and dramatic spectacle – a huge evening thoroughly enjoyed by all!

 

Though the vagaries of the oil market proved to be the matinee idol for global equities’ theatre of dreams last week, banking results from HSBC, Standard Chartered, Lloyds Banking Group and RBS plus the plight of the London Stock Exchange made valiant attempts to grab the headlines in London last week. The level of volatility was seismic in the last 5 days with the net result for each bourse’s performance having little bearing to reality. Huge companies gained and lost massive percentages throughout the week – almost unprecedented even during the times of the 2008/9 financial crisis and the Iraq war going back to 2003. It is understandable that mining companies from such a trashed level should post double-digit changes in the hope that post the ‘kitchen-sinking’ of their results, there was some possibility of recovery in the air. However when it happens to large banks and it did in terms of Standard Chartered, no one can be surprised that the odd eyebrow was ‘cocked’ in surprise and concern in the process.  

To summarise, the S&P last week added 1.9% in value with the FTSE grabbing a very meaningful 2.45%, with European bourses adding an average of 2.5%, with Japan settling for 1.39% gain, despite concern over Abenomics and a strong Yen, which was unhelpful. The Shanghai Composite had a shocker, losing 6.5% on Wednesday, but closing only 3.4% down on the week.  As previously stated oil was demonstrably volatile and over influential on equity prices. Brent crude eventually finished the week up 8.8%. The Dollar was always in the driving seat and gold, having touched $1260 an ounce finished the week down to $1221 an ounce on Friday night.

IMHO, despite tough warnings of the potential danger to the UK’S economy in the event of BREXIT flagged up by George Osborne at the G-20 meeting in Shanghai, the fall in Sterling’s value in the past 2 weeks attributed to BREXIT is greatly over-stated – in fact much of it is twaddle. The Dollar is strong period. It is the only mature economy that threatens to increase interest rates in 2016. Inflation is almost consequential at 1.7% in the US, though Friday’s reading of US GDP grew at an annualised rate of 1% in the fourth quarter. In the case of the U.K. GDP grew at an annualised rate of 1.9%, a fair bit lower than the original estimate of 2.3%.  

Just to put a little more meat on the bone on the four main UK banks that reported annual results, both their results and investors/the public’s feelings towards them understandably attracted very mixed emotions.  All four banks and Barclays had roller coaster rides in terms of the performance of their share prices. By Wednesday, apart from Lloyds and HSBC, the rest were down at one point by almost double digit percentages. So for the sector, with the exception of RBS, to end last week’s 5 day trading period in positive territory was miraculous. I hasten to add that the sector’s performance in the last 3 months has been pitiful at best. 

5-day performance from 22nd February to 26th February – RBS -8.4%, HSBC +5.9%, Lloyds +15%, Standard Chartered +1.2%, Barclays +4.1%.

Cost cutting and PPI provisions and impairment charges were high on many of the agendas. HSBC’s chairman Douglas Flint will be standing down this year and CEO Stuart Gulliver next year. The woes of Bill Winters, CEO of Standard Chartered Bank, seem to get worse. So with excessive exposure to emerging markets, cutting back the balance sheet and making 15k redundancies seems a sensible though very painful remedy. Lloyds Banking Group’s shareholders were bought off by two generous dividends in the circumstances, much to the chagrin of the taxpayer who still owns 9% of the bank. PPI claims for the year were £4 billion and still the senior management backed the truck up for massively increased emolument! In fairness I suppose the share price has recovered, but the PPI claims for the last few years are disgraceful – I think £15 billion! Barclays Bank posts numbers next Tuesday and Chairman John Macfarlane and new CEO Jas Staley will be under the cosh to unveil the banks plans going forward and the roll New York will or will not play in investments banking. Investors also want updating on the ugly litigious spat between the banks and Amanda Staveley and the manner that capital was raised for the bank in Abu Dhabi and Qatar in 2008. 

 

On the question of emoluments, thus was also the case also for RBS’S Ross McEwan, whose package doubled in size to an alleged £3.8 million, despite RBS incurring losses for 8 consecutive years. Last year’s efforts included a £2 billion provision for US mortgage misdemeanours and PPI claims. Though Lloyds Banking Group is within a couple of pence from break even, RBS remains well and truly under water. Shares closed on Friday at 227p with break even at 502p! It seems very unlikely that the taxpayer will ever be fully recompensed in terms of the £45 billion bail-out. The banking sector will only be for brave investors for the next few months. I have no idea if it is just circumstantial, but I notice Lord Mervyn King is having his book serialised in the Telegraph, warning that the World awaits another crash, as in his opinion, regulators and banks have failed to grasp the nettle over necessary reform. Interesting thoughts, but I sincerely hope that Lord King does not pop up on the world stage with monotonous regularity like Greenspan, pontificating on the world’s economy and how he would put it right! 

 

Finally, suffice to say that I am devastated that the LSE’s overall control may fall in to German hands in a £20 billion merger with Deutsche Boerse. I am a progressive and I do understand free markets and greater penetration. Like thousands of others we must remember that that there is no such deal as a joint venture. Once we allow control to leave London, the LSE is on a slippery slope and the party is over. London is the financial centre of the universe. However effective the Deutsche Boerse is as an exchange, Frankfurt is a Mickey Mouse financial centre by comparison – BREXIT or no BREXIT. Good sense must be allowed to prevail. I can see Messrs Cameron & Osborne smiling like Cheshire cats, due to their pro-EU stance, but this deal is not for passionate UK nationalists or City of London operators. Xavier Rolet has done an outstanding job as LSE CEO. Everyone knows he has political aspirations to stand in the next French presidential elections, but there is no need for him to hand control to Frankfurt with such indecent haste. There are plenty of candidates to run this very successful service to the world of global investors. I am sure that chairman elect Donald Brydon and Carsten Kengeter, CEO elect and former head of UBS investment bank are pillars of financial society, but nothing will persuade me that the proposed deal is anything but the beginning of the end for the heritage and influence of the LSE – a tragedy! 

UK companies posting results this week – Monday – Keller Group, Photo-Me, Bunzl, Hiscox, Jupiter Fund Management, Tuesday – Barclays, Direct Line, Just Eat, Taylor Wimpey, Tullett Prebon, Greggs, Fresnillo, Moneysupermarket, Glencore, Ashtead – Wednesday – ITV, Dignity, Intertek, Stagecoach, Thursday – Whitbread, CRH, Admiral, Inmarsat, Denel Energy, Shawbrook, Travis Perkins, Friday – LSE, WPP


US companies posting interim results – Saturday – Berkshire Hathaway, Monday – Taser, Tuesday – Autozone, Dollar Tree, Ford Motor (sales) Wednesday – Brown Forman, Abercrombie & Fitch, Thursday – Rite Aid, Stage Stores, Ciena, Barnes & Noble, Kroger, Smith & Wesson, H&R Block, Friday – Big Lots.


ECONOMIC DATA –
 Monday – UK money supply and mortgage approvals, US Chicago PMI, Tuesday – UK PMI, Wednesday – US PPI and Oil inventories, UK PMI construction, Thursday – UK PMI services, US Initial Jobless Claims, Friday – UK CPI inflation estimates , US Non-Farm Payrolls & employment data. 

 

David Buik

Market Commentator – Panmure Gordon & Co


D +44 (0)20 7886 2775

Mobile – 0044 7788 144 877


Panmure Gordon & Co


One New Change | London | EC4M 9AF | United Kingdom

Market update

Well the ‘IN’ EU mob did a poor job of scaring equity punters away from their fodder today.  They spent most of the day in the trough gorging themselves on the fayre on offer – FTSE 100 +140 at 6008 at 3.45pm! – Virtually every sector is up – oil +2%, mining +2.5%, drugs +2%, Banks +6%, thanks in the main to Lloyds’s 13.4% leap to only 2.5p short of breakeven.

 

A huge number of companies posted results today – BATS +1.25%, RSA +10% and BT +5% on news of a deal on BT Openreach. Despite the performance of Lloyds and RSA the yellow jersey will probably go to Serco – +15%. Well done Rupert Soames! So glad it has started to come right. The Media sector also did well – UBM +8% and Reed Elsevier +3%. Rentokil’s efforts were pleasing – +2.5%. Merlin seems to have turned around – +4% today.

 

There were also casualties on the day – Capita lost their chairman -5% and Premier Oil was friendless in the ring – -6%.

 

The Street of Dreams is only 15 points – oh no not again tomorrow!   

 

 

 

 

Panmure’s SIMON FRENCH made a few salient comments on UK GDP – This is a quick summary of the 2nd estimate of GDP released this morning which saw UK growth unchanged from the 1st estimate.

 

Headlines:

 

  • UK Growth unaltered from 1st estimate of 0.5% QoQ, 1.9% YoY

 

    1.  
  • All the growth coming from dominant services sector. The negative headlines out of manufacturing and construction are somewhat irrelevant from a UK growth perspective.

 

 

  • Some evidence of slowing distribution, hotels and restaurants sector in the December Index of Services. This is the one to watch ahead of the National Living Wage introduction in April

 

 

  • Worth noting that a huge proportion of UK growth (I estimate 5% of GDP growth since 2004) is due to net migration. This morning’s migration estimates (+323,000 annual to end Sept) are good news from this perspective. GDP growth per capita growth is actually near flat since 2008 while overall growth has run ahead. The importance of labour supply expansion to the UK growth story cannot be underestimated.

 

 

  • The UK’s Trade Deficit remains a drag on UK GDP, but recent Sterling weakness can be expected to moderate this impact in the coming months. UK growth continues to outperform EU and G7 benchmarks – a pattern it has shown since early 2013.

TODAY’S FAYRE

TODAY’S FAYRE – Tuesday, 23rd February 2016

 

You did not walk with me

Of late to the hill-top tree

As in earlier days,

By the gated ways:

You were weak and lame,

So you never came,

And I went alone, and I did not mind,

Not thinking of you as left behind.

 

I walked up there to-day

Just in the former way:

Surveyed around The familiar ground

By myself again: What difference, then?

Only that underlying sense

Of the look of a room on returning thence.

 

 Thomas Hardy – author & poet – 1840 – 1928

 

It really is a great shame that tempers should be frayed so early on in the EU referendum campaign. Surely it is not necessary. Passion is one thing; bad manners and personal attacks are rife and there is still 4 months to go. The icing on the cake yesterday came from Sadiq Khan in suggesting that 500,000 Europeans would have to leave London in the event of BREXIT – absolute twaddle! If Europeans living in London bring something to our economic party, they must be made welcome to stay! These scaremonger tactics are too immature for words.

 

Wonderful headline by Dr Gerard Lyons in the Daily Telegraph today – “EU is like the Titanic! We need to jump off before it sinks!”

 

Happy to attach a little credence to the IMF’s comments on the threat of a housing ‘bubble’ in the UK damaging growth in the UK, but its views on the uncertainty about the UK’s continuing membership of the EU is of no consequence whatsoever.

 

Unfortunately the price of oil seems the only lead indicator for markets to measure performance these days. Certainly yesterday the FTSE 100 (-75 points) washed away much of Tuesday’s gains, attributed to falling crude oil prices and the declining value of the Pound. I don’t buy blame BREXIT threat on the dropping Pound. The Dollar is a strong currency against all but the Yen. The ‘usual suspects’ in the form of Anglo-American, BHP, BP, Shell and Standard Chartered plus a few other banks surrendered much of the ground they made up on Tuesday. Sentiment was slightly negative on the Street of Dreams yesterday but there was a measurable bounce late in the session, when oil made a pop and the DOW closed up 0.32%, the S&P 500 was 0.44% to the good and the NASDAQ grabbed hold of 0.88% in value.

In Asia Chinese markets may well report the worst single month in recent times with the Shanghai Composite getting a good hiding today down 6.5% with just an a hour to go! The Hang Seng only lost 1.5%. The ASX closed just in positive territory, with the NIKKEI adding 1.5%, thanks to a slightly weaker Yen. Foxconn confirmed its acquisition of 70% of Sharp with a $5.9 billion bid. South32, the hive off operation of BHP posted less of a loss than expected ($1.7bn) – shares were up 3.54%.

 

This morning it was all change – oil, I’m told, was again the catalyst as the FTSE 100 added 100 points to 5965 by 8.40am.  I am beginning to think that 2 men in white coats should come and take me away. This makes no sense to me at all – insanity personified. It was a huge earnings day today, set out below. Greater minds than mine will assess their performances. RSA added 6% at the opening which was a surprise. Yes the profit was there, but surely the likes of Aviva and St James’s Place offer better long term value from that sector. Capita +3%, Bodycote +2.9% and UBM +3% captured investors’ imagination. Merlin initially displeased its acolytes with shares down 4%, though the outlook is good with 4 new theme parks in the pipeline – shares rallied to +4.37%.

 

It was rumoured in the Sunday press that Lloyds Banking Group would pay a dividend, when it posted results today, even though it might be perceived controversial, in view of the fact that 9% of Lloyds shares remain in UKFI (taxpayers) control. Chairman Lord Blackwell and Antonio Horta Osorio fixed bayonets and ‘cocked-a-snook at public opinion and paid out £1.6 billion plus a special dividend of £400k. Punters loved it and took the stock up, up and away adding 9.32% to 67.98 – still 5p below breakeven, but a big improvement from last Monday, when the shares were well and truly under water at 61.7p. In fairness, Panmure’s Simon French recommended that Lloyds may adopt this stance towards dividends on 22nd January to boost the share price and help to precipitate the final 9% sale, which George Osborne and the Treasury are keen to see completed. Sadly ANOTHER £2.1 billion provision for PPI was made, making a total of £4 million this year (£15 billion in total). The underlying profit for the year was up 5% to £8.1bn; the statutory profit before tax was £1.6bn.  Tier One Capital was strong at 13.9%. The bonus pool of £353.7 million was down from £369.5m in 2014, with an average of £4,600.00 going to each employee.

 

Finally hats off to BATS – solid as a rock in the last year with share up 3% in that period and still paying decent dividends as have IMPS – top effort.

 

U.K. Companies posting results this week – Thursday – Bodycote, Lloyds Banking Group, Coats, Countrywide, Kaz Minerals, STV Group, Mondi, RSA, Merlin Entertainment, Serco, BATS, Rentokil, UBM, Reed Elsevier, Premier Oil  – Friday – IAG, Rightmove, RBS, William Hill, Pearson

US companies posting interim results – Thursday – GAP, Friday – JC Penney

  ECONOMIC DATA – Thursday – UK GDP estimates, US Initial Jobless Claims

  David Buik

Market Commentator – Panmure Gordon & Co

D +44 (0)20 7886 2775

Mobile – 0044 7788 144 877

Panmure Gordon & Co

One New Change | London | EC4M 9AF | United Kingdom

TODAY’S FAYRE

TODAY’S FAYRE – Wednesday, 24th February 2016

You did not come,
And marching Time drew on, and wore me numb.
Yet less for loss of your dear presence there
Than that I thus found lacking in your make
That high compassion which can overbear
Reluctance for pure lovingkindness’ sake
Grieved I, when, as the hope-hour stroked its sum,
You did not come.

You love not me,
And love alone can lend you loyalty;
-I know and knew it. But, unto the store
Of human deeds divine in all but name,
Was it not worth a little hour or more
To add yet this: Once you, a woman, came
To soothe a time-torn man; even though it be
You love not me.”

 

 

Thomas Hardy – author & poet – 1840 – 1928

 

 

 

It would appear that the price of oil is becoming the unhealthy barometer of global equity markets. It is all but omnipotent. It was the catalyst in Europe yesterday, which saw the FTSE 100 yield 75 points to 5962.  New York quickly adopted a similar stance as the DOW shed 1,145, the S&P 500 1.25% and the NASDAQ 1.47%. I think I is worth pointing out in what was a fairly nondescript session that JP Morgan Chase has set aside a further $500 million impairment contingency for loans to energy companies.  JPM’S shares fell by 4.2%.  Don’t tell me that JPM is the only bank exposed to his sector!  

 

 

In Asia this morning the ASX was down 2.1% at the time of writing and the NIKKEI was 0.85% easier, much of the loss attributable to a very strong Yen.  The Shanghai was just up 0.21% and the Hang Seng however was down 1.36% despite the HK government posting a healthy $4 billion budget surplus. European bourses are expected to open lower – FTSE -12, DAX -36 and CAC -20 at 6.45am.

 

 

I want to spend this brief missive discussing the recent machinations of the LSE and the proposed merger with Deutsche Bourse, which if successful would leave London as the junior partner – 46% to Frankfurt’s 54% – approximate valuation – LSE £9 billion and DB £12 billion – Annual revenue LSE £1.28 billion DB E2.4 billion. This is the third time that these two distinguished bourses have tried to climb in to the sack together – the last time there was any possibility of a deal, it was thwarted by OMX in 2006.

 

 

It’s worth looking at the case history of the LSE. When Dame Clara Furse was appointed CEO by Eric Cruickshank back in 2001, the LSE was virtually omnipotent and its share price was about 250p. For the next eight years Dame Clara was courted by every predator in the world – Deutsche Bourse, Euronext, NYSE, NASDAQ, OMX and a consortium from the Middle East.  She rebuffed every one of them. The LSE’s share price was also ramped up to 1800p in 2008. She handed over the reins in May 2009 to Xavier Rolet. Coinciding with the credit crisis and the collapse in stock market prices at the time, the LSE’S share price plummeted to 410p!

 

 

 

What happened during Dame Clara’s tenure?  The first job she had to do was to persuade Sir Brian Williamson of LIFFE to sell her the futures exchange to compliment the cash business.  The culture of trading had changed dramatically and the LSE could become marginalised without derivatives. She was parsimonious and LIFFE was sold to Euronext, who eventually sold it on to ICE. The empress had no clothes and was exposed to the vagaries of European competition.

 

 

Whilst she was commercially flirting with all and sundry and the only half decent deal Dame Clara completed on behalf of the LSE was the acquisition of Boursa Italia – OK but hardly stupendous. However during this eight year period the LSE failed to bring the world to London or take London to the rest of the world.  The LSE was also expensive with its charges, resulting in other platforms  setting up in competition – Chi-X, BATS and Project Turquoise to name but a few. The LSE share of daily turnover dropped to about 40%. It was not a great scene. No longer was London necessarily first choice for many overseas IPOS.

 

 

Then enter stage left Xavier Rolet as CEO.  He has been a revelation.  He is a good communicator. The Russell Index, Cadel and Univista are now in place with a vibrant and well-regulated AIM market. Rolet has sharpened up the quality of technology and the LSE is considered very competitive for IPOS both domestically and on an international basis.  The LSE’s show is very much back on the road. The share price of 2649p (+14.5% after the M&A chatter).

 

 

I am all for greater global market penetration and competition.  However I am going to have trouble getting my head around Germany’s Deutsche Bourse being the senior party, as London is the financial centre of the world. Brexit or no Brexit, London does not want to drown in Brussels of Frankfurt bureaucracy. Once Germany gets hold of even a miniscule percentage of control, expression and innovation would not be the two words that come immediately to mind. Long term I fear the LSE’s goose would be cooked.  Thanks, but no thanks.  Carry on Xavier Rolet – brilliant!

 

 

 

 

 

 

 

U.K. Companies posting results this week – Wednesday – Petrofac, Barratt Development – Thursday – Lloyds Banking Group, Coats, Countrywide, Kaz Minerals, STV Group, Mondi, RSA, Merlin Entertainment, Serco, BATS, Rentokil,  – Friday – IAG, Rightmove, RBS, William Hill, Pearson

 

US companies posting interim results – Wednesday – Target, TJX, Dynergy, Thursday – GAP, Friday – JC Penney

 

ECONOMIC DATA – Wednesday – US New Homes sales, Thursday – UK GDP estimates, US Initial Jobless Claims

 

David Buik

 

Market Commentator – Panmure Gordon & Co


D +44 (0)20 7886 2775

Mobile – 0044 7788 144 877


Panmure Gordon & Co


One New Change | London | EC4M 9AF | United Kingdom

Market update

At 3.40pm the FTSE 100 was down 38 points at 600.  It was at one point down 58 points.  With the Street (DOW) down 100 points at the time, the prospect of improvement on today’s effort was remote.  Frankly after the incredible rally on Friday and Monday it would have been unreasonable to have expected more.  Two bad sets of numbers today in the form of BHP Billiton -5.5% and Standard Chartered Bank -5%, did little to improve sentiment.  Volumes were lighter than in previous days with just over 1 billion shares being trade on the LSE.

 

Talking of the LSE, its share price was up 10.38% at 2553p on news that a merger with the Deutsche Bourse is or has been discussed. I am all for further global penetration but would not want to be the junior partner in this merger.  London is the centre and heart-beat of the financial activity. Frankfurt isn’t! Say no more. Xavier Rolet has been a very perceptive brilliant CEO. Provident Financial posted adequate results and the share rose 2.3%.  However PF locked out Liberum Capital and Panmure from the analysts’ meeting.  Both have been known sellers of the stock. This, by any standards, is unorthodox behaviour.

 

Mining shares gave back some of yesterday’s gains – down by an average of 4%. Banks have surrendered a smidgen in value – Barclays 1% and RBS 2%. Lloyds and HSBC are unchanged. Drugs are easier by 0.5% and oils by 1%. Of the other companies that reported today – Ladbrokes was up 5%.  Analysts were upbeat about the merger with Corals, subject to approval. Persimmon maintained the good results posted by the sector in recent days – +4.5%.  Unite was down 3.5% and Croda was up 2.5%.

STANDARD CHARTERED BANK – “KITCHEN-SINKED?” – THROWN THE AGA IN AS WELL

 

STANDARD CHARTERED BANK – “KITCHEN-SINKED?” THROWN IN THE AGA AS WELL!

 

When Lord Mervyn Davies ran Standard Chartered Bank as CEO between 2001 and 2006 and then became chairman from 2006 until 2009, he must have purred like ‘Cheshire Cat’ for all but the last year. He was the ‘darling’ of the banking market. This mini ‘HSBC’ bank kept its nose clean and more or less avoided severe losses from sub-prime, derivative trading or from overly injudicious lending. However under the ebullient and supremely confident Peter Sands, who took over as CEO in 2006, the staff doubled to 70,000 between 2002 and 2008. Though the shares did dive from 1950p on 7th December 2007 to 655p on 20th February 2009, just before the introduction of quantitative easing, they did then rebound sharply to 1713p by 4th March 2013. Then it appeared that Peter Sands’s management team took their eye off the ball. They had a spat with US Department of Justice over money laundering allegations, which cost the bank $327m by way of fine. Then it all started to go wrong with huge exposure to Asia, where loan impairments started to grow. It was downhill all the way. The shares started to fall out of bed with Peter Sands resigning in April 2015. On the day Sands resigned and Bill Winters picked up the poisoned chalice the shares stood at 1063p. They fell to 482p on 15th December last year and rallied to 580p on 29th December 2015.

 

Today after a larger than expected loss of $1.5 billion was declared for the last year, with impairment charges up 87% to $4.06 billion and the prospect of as many as 15,000 jobs being lost, the shares fell 11% to 383p but have recovered to 412p (-5.53%). CEO Bill Winters has certainly ‘kitchen-sinked’ the balance sheet throwing out every single bad apple. There was confirmation that there will be no final dividend.

 

At 412p does this bank look an attractive buy, if you believe in tomorrow? If anyone can bring this bank round, Bill Winters can. The problem is that Standard Chartered Bank is no “HSBC” – It is one seventh the size! – Size is everything!

 

At 412p does this bank look an attractive buy, if you believe in tomorrow? If anyone can bring this bank round, Bill Winters can. The problem is that Standard Chartered Bank is no “HSBC” – It is one seventh the size! – Size is everything!

TODAY’S FAYRE

TODAY’S FAYRE – Tuesday, 23rd February 2016

“Be still, my soul, be still; the arms you bear are brittle, 

Earth and high heaven are fixt of old and founded strong. 

Think rather,– call to thought, if now you grieve a little, 

The days when we had rest, O soul, for they were long.

 

Men loved unkindness then, but lightless in the quarry 

I slept and saw not; tears fell down, I did not mourn; 

Sweat ran and blood sprang out and I was never sorry: 

Then it was well with me, in days ere I was born.

 

Now, and I muse for why and never find the reason, 

I pace the earth, and drink the air, and feel the sun. 

Be still, be still, my soul; it is but for a season: 

Let us endure an hour and see injustice done.

 

Ay, look: high heaven and earth ail from the prime foundation; 

All thoughts to rive the heart are here, and all are vain: 

Horror and scorn and hate and fear and indignation– 

Oh why did I awake? when shall I sleep again?”

 

 AE Housman – poet – 1859 – 1936

 

In the T-20 match in Johannesburg on Sunday England lost their last 7 wickets for 14 runs.  In fairness three of those dismissals were bizarre and unlucky. However take nothing away from ‘AB’S’ and ‘Amla’ contrasting batting prowess – they were sensational – the bludgeon and the stroke maker – but England’s bowling was pitiful. India will be in the driving seat at home hosting the T-20 World Cup finals, but if South Africa can forget the blues of their last visit, you’d have to fancy them to give a very decent account of themselves next month.

 

“The time has come, the Walrus said, to talk of many things – of shoes and ships and ceiling wax and cabbages and kings…! … and BREXIT

 

 Regardless of the differing views over the EU Referendum, I was very much hoping, that despite fever-pitched feelings, good manners, a degree of decorum with honour amongst thieves, might prevail. That sense of political camaraderie didn’t even last 24-hours, before the main dramatis personae – Cameron & Johnson – were casting aspersions on each other’s character coupled with comments of derision from the PM and intellectual contempt from the Mayor of London. This referendum is going to be a bruising battle. I just hope it doesn’t degenerate in to a metaphorical street brawl.

 

I think the PM and government may be slightly disappointed at the lack of big business signatories to remain in the EU. Many companies will not want to be drawn for fear of offending their clients and certainly in the City, there is evidence of gagging, as many financial institutions have been contracts with the government and EU clients.

 

It was inevitable that uncertainty concerning the outcome of the EU referendum would create some seismic waves of uncertainty. There was no disappointment in that department as Sterling fell by 2% against the Dollar – so what? Most currencies fell against the Dollar yesterday, apart from the Yen. Pro-tem, whilst the world is struggling to maintain decent growth, a soft Pound is good for exports. Conversely European equities were on a mission, with the FTSE 100 refusing to be left behind from joining in the prevailing euphoria.

 

This index added 1.5% to 6037. Rising oil prices (+6%) triggered a rally in energy stocks (Shell +3.9%), with miners blazing the trail – Glencore +11%, Rio +8%, BHP +8% and Anglo-American nearly 11%, aided and abetted by a reliable rumour that De Beers, might be eased out of the portfolio. Little concern was expressed by the threat of BREXIT and rightly so – 70% of FTSE 100 earnings are dollar related. Apart from RBS, which reports on Friday and HSBC, which disappointed its acolytes yesterday with a $858 million loss, due a significant increase in provisions for bad debts ($1.4 billion), banks had a good day in London (+2% with Standard Chartered +5.2%). HSBC’S profits were down 1% for the year at circa $18 billion. Their shares close down 0.94%, having been down over 3% at one point. The house building sector, despite good results from Bovis, lost 4%, apparently due to Brexit blues. Home Retail grabbed the yellow jersey courtesy of a left-field bid of £1.4 billion from Steinhoff of South Africa. Best Sainsbury’s sharpens up in the next 2 weeks; though for the supermarket to ‘over-pay’ would be folly.

 

In the small hours BHP posted a massive loss of $5.5 billion, which included right downs and losses incurred through dramatic fall in commodity prices. As expected the dividend was slashed by 75% – the first cut since 1986 and that loss was the first in 16 years.

 

The Street of Dreams added 1.4% on average yesterday thanks to a combination of improving sentiment, higher oil prices and the whiff of more M&A activity, thanks to informed gossip that Honeywell held talks with United Technologies (+4.95%), which has struggled recently with sales due to a strong Dollar, about a possible takeover. Fitbit did not please its acolytes and lost 15% in value after posting results.

 

Asia responded slightly negatively to a dip in oil prices over night, profit taking in bank shares and a strong Yen. The ASX closed and the NIKKEI both closed down 0.4%. Just after lunch the Shanghai Composite was down 0.8% and the Hang Seng by 0.25%. The FTSE 100 had lost 50 points at 5990 at 8.30am. IHG’s news that a special dividend of $1.5 billion was going to shareholders, saw its shares rally by 3.5%. Ladbrokes posted an expected loss but the synergy of a possible merger with Corals attracted attention from punters – +6%. We await Standard Chartered Bank’s results later in the day. A loss of about $800 million is expected. Provisions for bad debts will cause concern. HSBC is seven times as big and is better placed to cope.

 

According Howard Silverblatt at S&P Indices:

 

“Since last Friday almost 90% of the Q4 2015 earnings reported, 67.6% of the issues are beating estimates (the historical rate is two-thirds), but only 36.8% beat As Reported GAAP rule based earnings estimates and less than half, 46.8%, beat sales estimates.

  Explained ‘responsibility’ for any short fall on the cost side includes currency costs and a growing list of special one-time items (never to be repeated, of course). On the income side, helping earnings are the ‘difficult decisions made’ by companies under the heading of cost-cutting (as layoffs and location changes appear to be on the rise).”

As Reported 12-Month earnings per share (EPS) for the S&P 500 has fallen 12.5% from its Q3 2014 high, with 88.5% of companies having reported.

 

U.K. Companies posting results this week – Tuesday – BHP Billiton, Provident Financial, Drax, Persimmon, Standard Chartered Bank, IHG, Ladbrokes, Unite, Croda Wednesday – Petrofac, Barratt Development – Thursday – Lloyds Banking Group, Coats, Countrywide, Kaz Minerals, STV Group, Mondi, RSA, Merlin Entertainment, Serco, BATS, Rentokil,  – Friday – IAG, Rightmove, RBS, William Hill, Pearson

US companies posting interim results -Tuesday – Toll Bros, Wednesday – Target, TJX, Dynergy, Thursday – GAP, Friday – JC Penney

  ECONOMIC DATA – Tuesday – UK BBA Mortgage approvals, Wednesday – US New Homes sales, Thursday – UK GDP estimates, US Initial Jobless Claims

  David Buik

Market Commentator – Panmure Gordon & Co

D +44 (0)20 7886 2775

Mobile – 0044 7788 144 877

Panmure Gordon & Co

One New Change | London | EC4M 9AF | United Kingdom